Peggy is an executive for the Tan Furniture Manufacturing Company.Peggy purchased furniture from the company for $7,000.The price Tan ordinarily charges a wholesaler is $8,500.The retail price of the furniture was $12,000,and Tan's cost was $8,000.The company also paid for Peggy's parking space in a garage near the office.The parking fee was $1,200 for the year.All employees are allowed to buy furniture at a discounted price comparable to that charged to Peggy.However,the company does not pay other employees' parking fees.Peggy's gross income from the above is:

Question

Quizplus · Accepted Answer

Peggy's gross income includes the difference between the wholesale price and the price she paid for the furniture ($8,500 - $7,000 = $1,500) and the parking fee paid by the company ($1,200), totaling $2,700. However, the furniture discount is not taxable as it is available to all employees, so only the parking fee is taxable, making her gross income $1,200.

Peggy Is an Executive for the Tan Furniture Manufacturing Company